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Ford to clean house at TCHC after spending spree exposed

Mayor Rob Ford called for the resignation of members of the Toronto Community Housing Corp. board on Monday, hours after the city’s auditor-general blasted the housing agency for wasting millions in untendered contracts and lavish employee expenses.

Mayor Rob Ford called for the resignation of members of the Toronto Community Housing Corp. board on Monday, hours after the city’s auditor-general blasted the housing agency for wasting millions in untendered contracts and lavish employee expenses.

Board chair David Mitchell has been asked to resign.

Ford hinted that CEO Keiko Nakamura may be on the way out, too. “Ms Nakamura will be meeting very shortly with me to discuss her future,” he said. “I’m going to reserve comment on (whether she will be removed) until after I talk to her one-on-one.”

“This money could go to helping people that need it the most — the people I have monthly meetings with to try to get people’s units fixed, get them transferred. Time after time after time, the excuse is we don’t have enough money. Well, obviously that excuse does not hold water,” Ford said in a news conference.

“I’m asking for all citizens that sat on the board to resign immediately. We have, as you know, changed the councillors, three out of four of them, and the … civilians should do the right thing and tender their resignation.

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“We will move as quick as we can with the new appointments,” he added.

Auditor-general Jeffrey Griffiths, in two audits released Monday, revealed a shocking list of expenditures by TCHC, including $40,000 spent on a staff Christmas party at the Montecassino banquet hall in December 2009 and one for $53,000 the year prior.

He also criticized a practice of single-tendering of contracts by TCHC that was “common and in some cases inappropriate.’’

Some purchase orders were split to get around rules that required expenses over $500,000 to get approval from the TCHC board of directors, and not just the CEO.

Griffiths found, for example, that a purchase of $3 million worth of bathroom and lighting fixtures from a single China-based supplier, Well Group Enterprises Ltd., was made using 37 separate orders.

Some $5 million in purchases from that supplier since 2006, approved by then chief financial officer Gordon Chu, were inadequately documented, with no proof that the supplier was selected based on open and competitive bidding from local suppliers.

“The arrangement with both (the supplier and its overseas agent) appears to be completely informal,” the auditor determined.

The TCHC spends about $200 million a year on procurement. Griffiths found that anywhere between $4 million and $10 million of that has been wasted because there was no competition between suppliers.

Ford said we will also be “dealing with” former CEO Derek Ballantyne, now the chief operating officer at Build Toronto, a city agency.

“I worked closely with the current CEO during my tenure from 2002 to early 2009,” Ballantyne wrote in an email to the Star on Monday night. “I share the concerns of the CEO and the board of TCHC regarding the report and the need to take immediate steps to address the issues raised by the auditor general.”

Beyond the specific spending, Griffiths noted: “A greater concern is a culture at the TCHC which allows such expenses to occur.”

“I will not defend these actions,” she said. “Frankly, I feel betrayed.”

Some of the incidents occurred before she was CEO, but Nakamura served as chief operating officer under Ballantyne between 2005 and May 2009.

She attributed the problems to the “poor judgment and unacceptable actions of a few individuals.” Without giving details, she said employees responsible for “the most flagrant” of the abuses had been fired.

The corporation’s “executive team” has been replaced, she said, including chief financial officer, chief operating officer, and chief development officer. But those changes were made months ago.

Nakamura said she is taking steps to recover the money, and has cancelled so-called “p-cards’’ — purchasing cards staff can use to buy goods.

As for herself, Nakamura said the audit reveals that “I conducted myself with complete integrity.”

Mitchell said the board continued to support Nakamura, but acknowledged he had been too trusting of “the former senior leadership,” declining to name any individuals.

While also saying he felt “betrayed,” Mitchell accepted responsibility and pleaded for the TCHC, saying “it would be a tragedy, and tragic, if these findings, as appalling as they are, are used to undermine the importance of social housing.” Rumours making the rounds at city hall suggest Ford could seek to sell TCHC to private interests.

The TCHC is one of North America’s largest landlords, housing about 164,000 tenants in a $6 billion housing portfolio.

Some of the irregularities found in Jeffrey Griffith’s review of TCHC procurement practices covering Jan. 1, 2009 to June 30, 2010.

• Inappropriate expenses: a $40,000 Christmas staff dinner, $1,000 for Holt Renfrew chocolates, $5,000 given to one staffer without documentation of how it was spent; $800 for massages at a staff picnic.

A “lack of due diligence” in reimbursing expenses to third parties.

Frequently, a lack of a proper bidding process in buying goods or services, which could have saved $4 million to $10 million.

$500,000 worth of solar panels bought from China using an overseas agent who was a long-time friend of a TCHC staff member, without declaring a conflict of interest.

• A $25 million refurbishment deal handed to a vendor who put forward an unsolicited proposal.

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